The Republic of Korea’s energy use per capita is among the highest in the world and it is the world’s ninth-largest consumer of energy, mostly derived from fossil fuels.
The role of natural gas and integration with renewables development plans in long-term planning is expected to be critical in achieving a carbon neutral target by 2050.
For decades now, Korea has depended on imports of oil, coal and natural gas for well over 90% of its energy needs. In 2019, it was the third-largest importer of LNG in the world.
The government plays a central role in planning and operating the energy system via both regulation and ownership of utilities and infrastructure such as Korea Electric Power Corp (KEPCO & GENCOs), Korea Power Exchange (KPX) and Korea Gas. Private investment in power and gas has been growing and competitive markets developing but there is a long way to go on deregulation. The government regularly issues long-term national energy plans, the latest being the 9th Basic Plan for Long-term Electricity Supply and Demand 2020-2034, issued at the end of 2020 by the Ministry of Trade, Industry and Energy (MOTIE). This is the first major plan since the commitment to become carbon neutral by 2050.
Renewable targets are aggressive, increasing capacity from 20 GW now to 78 GW in 2034. The plan noted that while the rated capacity of renewables would treble to 40% of the total, they would represent less than 10% of actual generation in 2030 due to intermittency, reinforcing the importance of gas-fired power to complement renewables. This gives gas a more complex role in the power mix as it will be required to provide both baseload and peaking power to ensure system reliability. MOTIE expects this to lead to a 15% rise in LNG demand from 42 MTPA now to 48 MTPA in 2034.
A quarter of the nuclear plants (seven) will be retired by 2034 when nuclear’s contribution to energy generation will drop to 10%, and all plants are expected to be phased out by 2050.
The role of nuclear energy is the greatest question mark. By planning its phase out, the current government of President Moon Jae-in removes an obvious candidate to replace fossil fuels in the mix. Given the success of its nuclear power programs with its well-developed supply chain and ability to export nuclear power plants, it is very likely that a future government will simply cancel this part of the plan.
Either way, the reduction in use of fossil fuels depends on the ability to scale up the use of renewables at the same time as developing alternatives, such as ammonia and hydrogen, and improving energy efficiency. It may not be that easy, given the cost and need for new infrastructure. As coal is the priority target for reduction, accounting for 40% of electricity generation today, oil and gas are likely to remain significant for some time.
The new blueprint also focuses on energy efficiency to reduce demand by 18.6%.
Meeting its carbon targets will require decarbonisation efforts across all energy sectors, removal of regulatory and institutional barriers, introduction of flexible market designs, and deployment of the country’s advanced technologies and innovative capacity. The government’s Green New Deal in July 2020 was a significant step towards accelerating the transition. It aims to increase the number of electric vehicles from 90,000 at the end of 2019 to 1.13 million by 2025 and increase the number of hydrogen-powered fuel-cell electric vehicles on Korean roads from the 5,083 sold in 2019 to 200,000.
The Ministry of Land, Infrastructure and Transport in 2019 announced plans to build four pilot hydrogen-powered cities by 2022 with a view to transform 10% of the country’s counties, towns, and cities to hydrogen power by 2030, and 30% of them by 2040. If this vision succeeds, hydrogen will account for 5% of projected power consumption by 2040.